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Definition

The adjustment of figures within a data stream to change their relative emphasis in a calculation. Thus, for example, in an exponentially weighted moving average , the prices closer to the current time are given exponentially more emphasis than the older price in the average. An index which is weighted for the market capitalisations of the companies which it includes gives greater emphasis to those whose valuation in the share market is greater. Weighting improves the accuracy and representativeness of calculations. Thus, the price from 200 days ago in a simple moving average has as much impact on the level of the moving average as yesterday's price - and yet, clearly, because it happened so long ago is must be less relevant.

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